- Financial inclusion in developing markets has become even more important during the pandemic.
- Mobile solutions are proving to be a lifeline in emerging economies.
- Fintech firms can use this opportunity to build their reputations and emerge stronger once the crisis has passed.
Leading a global business entity, one quickly understands the fundamental importance of fintech services to the developing world. Fintechs have a unique capability to extend financial inclusion, improve the daily lives of people and spur growth. While the virus may have forced us to adjust the way we operate, it hasn’t halted either our progress or our commitment to this cause, which is more important than ever given the current circumstances.
Despite the fact that several developing countries – especially those in Africa – are, thankfully, at what may be considered a less advanced stage of the pandemic, key sectors of the economy in emerging markets are already experiencing a slowdown. So what does this mean for communities and businesses?
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The smartphone revolution
Since development began late in most emerging markets and their infrastructure is limited, the majority of developing countries can be considered 'mobile-first'. For many people in these countries, their mobile handsets are their sole connection to financial tools, information and other vital services. This means that providing robust fintech solutions to such regions is not a matter of convenience, as it is in the first world, but one of necessity, since they bridge gaps for unbanked people that the existing banking sector cannot.
Now, with the added challenge of this pandemic, the issue of accessibility has been brought to the fore. For those who cannot access mobile phones, the ability to attend bricks-and-mortar banks and manage their money is even more limited, if not cut off, worsening the already very limited availability and support offered by traditional banking in many emerging countries. Those who have been able to access the internet in such markets, conversely, find that through their fintech services they can instantly tap into much-needed financial resources to keep their businesses and lives in order.
What is the World Economic Forum doing about the coronavirus outbreak?
Responding to the COVID-19 pandemic requires global cooperation among governments, international organizations and the business community, which is at the centre of the World Economic Forum’s mission as the International Organization for Public-Private Cooperation.
Since its launch on 11 March, the Forum’s COVID Action Platform has brought together 1,667 stakeholders from 1,106 businesses and organizations to mitigate the risk and impact of the unprecedented global health emergency that is COVID-19.
The platform is created with the support of the World Health Organization and is open to all businesses and industry groups, as well as other stakeholders, aiming to integrate and inform joint action.
As an organization, the Forum has a track record of supporting efforts to contain epidemics. In 2017, at our Annual Meeting, the Coalition for Epidemic Preparedness Innovations (CEPI) was launched – bringing together experts from government, business, health, academia and civil society to accelerate the development of vaccines. CEPI is currently supporting the race to develop a vaccine against this strand of the coronavirus.
Technology is critical
As everyone has been forced to reconcile their need for interaction with restrictions on physical contact, data consumption has risen precipitously. Isolated families use video services like WhatsApp and Skype to stay in touch, while many business meetings have moved to Zoom and schools to Google Classroom. The world’s second-largest mobile operator, Vodafone, has reported a 50% rise in internet usage.
In developing countries, people need more credit and data advances to stay in contact during these challenging times, as well as contactless micro-finance services to replace physical transactions. Managing this load using the already stretched infrastructure of such markets is a significant challenge, but one where machine learning, big-data analytics and artificial intelligence can really make a difference.
Surviving and rebuilding
In the midst of the pandemic, with economies stricken across the world, some specific sectors and companies have shown strong business resilience with minimum impact from the developing conditions. My company is fortunate to be among them - but unfortunately this will not be the case for many other fintech firms, which may have no solid foundation and are already operating under a limited capacity. These businesses will simply run out of cash and go out of business as a result of the pandemic.
For those that do manage to stay afloat, communication is key. They should keep their clients regularly updated, be clear with them and let them know that while the working environment may have changed, the company is still open for business to the available extent. They then need to strive to bring that commitment to life, taking full advantage of the benefits of technology. By continuing to provide the best possible service to clients, brands can build a strong reputation that will long outlive this turbulent time.
Most importantly, however, as the whole world shifts towards a new reality, there will be an abundance of post-pandemic opportunities for businesses. There will be new niches and exciting ideas, as people realise that the digital tools on which they have relied during this disruption are in fact providing important services, regardless of the conditions.
And so to truly support innovative small businesses, especially in developing countries, we must continue our concerted efforts to provide them with a robust foundation and access to financial inclusion, so that they have the chance to blossom in the aftermath of these troubled times.